Posted by Malcolm Graham-Wood - Malcy's Blog
Sentiment over quota adhesion won over stock build and US production yesterday and crude had a reasonable rally helped by a weaker greenback. Stocks were higher than expected at 6.5m barrels and gasoline was also higher than forecast at 3.9m barrels, refineries still producing despite lower refining margins. Opec and non-Opec cuts appear to be working and the reports so far show that over 80% of the target is being hit, probably helped by Saudi cutting more to help things out. There are still many clowns out there who think that US production can rise by a meaningful amount from a standing start but pretty much anything they can do can be nullified by turning just one spigot in Saudi Arabia…
For those of you who looked at Cycles Analysis chart work from Andy Pancholi, the February package was out yesterday full of interesting facts and figures.
Sound have released the independent basin model for Tendrara and Meridja which gives a mid-case number of Gas In Place as 17 TCF with a range of 9-31 TCF. The full CPR on the acreage should be commissioned after the results of the TE-8 well are known and before the FID which is scheduled to be taken at the end of this year. Existing wells prove up the 300-500 BCF already in the market and complement my current estimate of 3-5 TCF on the acreage. If however the numbers above were in any way accurate and their is no reason to believe not, there is a lot more to go for in the share price, time will tell.
Sound are not standing still, they never do and are already contemplating a drilling programme on Sidi Moktar wells for re-entry and taking a look at the lower Jurassic. We mustn't forget that drilling on Badile is expected to start this quarter as well giving Sound and its shareholders a particularly busy few months. Talking of shareholders I am pleased to have my ticket for tonight where several hundred people are joining the company for an operational update. I'm told that many more couldnt get in with a wait list of another 100 and over 300 are dialing in to the presentation…
Another company not letting the grass grow beneath their feet is SDX Energy who have produced a punchy update this morning. The South Disouq programme is well under way and with the well location decided, service company hired and the rig supplier and unit chosen a spud date of end February looks achievable. At Meseda the upgrade review has been completed and the project is moving to implementation phase. The work should double capacity and increase production by 100% from current production levels on the licence.
In the only recently acquired Moroccan acreage, the company are already talking about accelerating the drilling campaign and bringing forward 2018 plans into this year which might bring forward gas production too. CEO Paul Welch is upbeat in his statement and so he should be, he has a number of really interesting prospects with substantial upside, new and existing projects and the backing of his shareholders in the recent well oversubscribed raise, what's not to like?
A rather uninspiring update from SOCO this morning as they miss their production guidance producing 9,883 b/d against a prediction of 10-11/- b/d although warning of slippage had been heeded. With over $100m of cash and a very strong model that delivers high prices and low opex giving a break even of the low $20's one cant grumble but it is clear that they are gearing up for something hence the new ex-Cairn arrivals.
It was disappointing to see the profit warning from Plexus but it is mitigated by the massive amount of cost cutting that has been going on and cash preservation. Also to a certain extent you know with Plexus that by the very nature of their offering repeat orders will be just around the corner from their blue chip client list. That is proven this morning by the announcement of an extension to a contract for Shell Brunei by two years. I would remain highly supportive of Plexus and its management and whilst this is a disappointment and shows that all is not yet rosy in oil service company land, POS will undoubtedly be a survivor.
The football this week has definitely been a bit weird as the top clubs put in highly differing performances. The Gooners were abject, the Red Devils could score against Hull City Tigers, Chelski missed a pen at Anfield that could almost have brought out the Trophy and only the Noisy Neighbours delivered in full.
The cricket tour is over thank goodness as yesterday England put in another great top, middle and lower order collapse losing 8 wickets for 8 runs. I was making the tea at the time and it lasted longer than that spell as our batsmen were bamboozled by a bit of spin, good thing it doesnt travel…
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